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Operational leasing gaining popularity in Turkey

Bahattin Gonultas Thursday, March 13, 2014

The growing awareness in Turkey of the advantages of operational leasing is attracting new customers and growing the market.

ANKARA - Growing awareness on the advantages of operational leasing, renting instead of buying, is attracting new customers.

According to the “operational leasing sector report in Turkey” by Turkish Short and Long Term Automotive Rental Association, the total number of operational leasing vehicles in Turkey reached 207,000 in 2013 an increase of 37,000 from 2012.

New vehicle sales to operational leasing companies increased by 13.5 percent in the last year and made up 13.5 percent of the total new vehicles sales in Turkey.

Experts say that the market in Turkey is likely to see the highest growth rate in the region overtaking several European countries.

The association estimates there are 26,189 customers in the country an increase of 16,514 customers since 2010.

“Today, full service operational lease is still the best solution for companies,” Dominique Cardineau, CEO of Fleetcorp said. “Turkey and many other countries in Europe have been affected by the prolonged worldwide recession and some companies have reduced their fleets due to a need to downsize, which affected indirectly the growth numbers.”

“However, operational leasing is not questioned to the same extent but preferred during difficult economic times, where companies have to invest their money in their core businesses and need to manage their costs effectively.”

Cardineau said that the main growth is coming from “emerging” markets such as Brazil, Russia, India and Turkey.

Commenting about the main strength of the Turkish leasing sector he said that there is a huge room for growth. “Firstly, 80 percent of the companies in Turkey are still purchasing their cars. Secondly, Turkey has a very strong economy and a burgeoning small to medium sized enterprises sector.”

However, the lack of legislative arrangement in the operational leasing market is one of the biggest problems in Turkey. In 2003 there was some legislation change which made operational leasing more attractive and a more effective solution for companies.

Yet some existing legislation restricting the use of commercial vehicles has in turn negatively affected the market. Mainly though in Turkey it is regulation changes and fluctuations in taxation and rates that the operational leasing companies have to struggle with.

Cardinaeu added that the lack of structured funding available in Turkey to refinance the operational leasing industry is also a concern.

“This is probably due to the wrong business model being developed by some players when the market started to boom. They were acting more like car traders instead of positioning themselves as non-banking financial institutions which badly influenced the banking sector as well as the regulators and government authorities,” he said.

According to a survey published by Fleet Europe magazine the main concern of fleet managers around the world is that they have access to detailed and accurate information about the real cost of theır fleet in order to make sure they get value for money from their leasing company.

Cardinaeu concluded that the market will be helped by large international companies entering Turkey bringing with them international standards and processes which will allow the market to mature.